Why HR in Indians Private Banks Lacks Power: Controlled by Senior Management

Human Resource (HR) departments in any organization are supposed to play a crucial role in managing employee relations, enforcing policies, and ensuring workplace harmony. However, in many Indian private banks, the reality is far from ideal. HR professionals often find themselves powerless, with key decisions being controlled by the upper hierarchy, turning them into mere puppets. This lack of authority in HR can have serious implications for employee welfare, morale, and the overall work environment.

1. Hierarchy Rules Over HR

In most Indian private banks, hierarchical power structures dominate the workplace. Senior management and top-level executives hold significant control over decision-making processes, often sidelining HR. Some key reasons behind HR’s lack of influence include:

• Concentrated Power: In many private banks, decisions related to promotions, transfers, and even employee grievances are made by senior management. HR is often consulted only as a formality, and their recommendations may be ignored if they don’t align with the wishes of the top executives.
• Lack of Independence: HR departments often report directly to the senior management or board of directors, meaning they lack the independence needed to act in the best interest of employees. Their decisions are frequently influenced by the priorities of the higher-ups, not by what’s fair or ethical.

2. HR as a Puppet

In this scenario, HR departments are reduced to playing a reactive role rather than being proactive in managing employee welfare. They are often tasked with enforcing decisions made by the hierarchy without having any say in shaping them. This has several negative effects on the workplace, including:

• Ineffective Grievance Handling: When HR has no real power, employee grievances related to workplace harassment, unfair treatment, or conflicts are not handled effectively. HR professionals might be hesitant to take strong action against powerful individuals in the hierarchy, leading to unresolved issues and a toxic work environment.
• Employee Dissatisfaction: When employees realize that HR has no real power and cannot address their concerns, their trust in the organization erodes. This leads to high levels of dissatisfaction, lower engagement, and eventually, increased attrition.
• No Employee Advocacy: HR’s primary role should include advocating for employees and ensuring a fair work environment. However, in many private banks, HR departments lack the authority to fight for employee rights, making them ineffective in creating a balanced workplace.

3. Impact on Organizational Culture

The lack of real power in HR departments contributes to the reinforcement of a rigid and toxic organizational culture in many Indian private banks. Some of the key cultural challenges include:

• Favoritism and Bias: Without a strong HR presence to mediate fairly, favoritism and bias often become entrenched in the organization. Senior management can favor certain employees for promotions or perks based on personal relationships, while deserving employees are overlooked.
• No Accountability for Senior Executives: In situations where the hierarchy controls HR, senior executives are rarely held accountable for unethical behavior. This creates an environment where rules are bent for those in power, leading to a lack of transparency and fairness.

4. Why the Problem Exists

Several factors contribute to why HR in Indian private banks remains weak and powerless:

• Focus on Profit Over People: Many private banks prioritize financial performance over employee well-being. In this profit-driven environment, HR is seen as a cost center rather than a strategic partner. This marginalizes HR’s role and limits its influence on crucial decisions.
• Short-term Goals: Senior management in private banks is often focused on short-term goals, such as hitting financial targets or increasing shareholder value. This creates a culture where people management is not seen as a priority, further diminishing HR’s role.
• Lack of Regulatory Oversight: In some cases, regulatory bodies overseeing the banking sector in India focus more on financial compliance than on employee welfare. Without strict oversight on labor practices, HR departments have limited ability to challenge the existing power structures.

5. What Needs to Change

To create a healthier, more balanced work environment in Indian private banks, several changes must be made:

• Empower HR: HR departments need to be given more authority to make decisions related to employee welfare, conflict resolution, and policy enforcement. They should not be subservient to senior management but should act as an independent body that ensures fairness.
• Create Accountability: There needs to be a clear separation of powers between HR and the upper hierarchy. Senior executives should be held accountable for their actions, and HR should have the authority to address grievances, even if it involves individuals at the top.
• Focus on Employee Welfare: Private banks must shift their focus from purely profit-driven goals to a more balanced approach that values employee well-being. A healthy work culture leads to better performance and lower attrition in the long run.

Conclusion

In many Indian private banks, HR departments are powerless, controlled by a rigid hierarchy that prioritizes the interests of senior management over the needs of employees. This results in a workplace where fairness, accountability, and employee advocacy are often compromised. For the banking sector to thrive, HR must be empowered to play a more strategic and independent role, ensuring that employee rights and welfare are given the attention they deserve.